PRECIOUS-Gold holds near $955/oz, eyes dollar

                                
 * Gold prices hold in range, track dollar index
 * Oil softens after sharp drop in Chinese stock market
                                
 * Union warns Implats strike could spread to refinery
(Updates throughout, changes dateline from TOKYO)
                                
 By Jan Harvey
                                
 LONDON, Aug 31 (Reuters) - Gold held near $955 an ounce,
mirroring the largely rangebound dollar index, with softer oil
prices reducing interest in the metal as an inflation hedge.
                                
 Spot gold <XAU=> was bid at $953.75 an ounce at 0900 GMT,
against $954.45 an ounce late in New York on Friday. U.S. gold
futures for December delivery <GCZ9> on the COMEX division of
the New York Mercantile Exchange eased $3.30 to $955.50.
                                
 Gold was awaiting fresh direction from the forex market, as
the dollar index <.DXY>, which tracks the U.S. unit's
performance against a basket of six major currencies, held
steady on Monday. [FRX/]
                                
 "We are still in a trading range between $920-930 and $960,
and we will stay here as long as the U.S. dollar is rangebound,"
said Commerzbank analyst Eugen Weinberg.
                                
 The precious metal is taking little direction from supply
issues or from underlying demand over the seasonally quiet
summer period. "At the moment, gold has no life of its own, it
is just trading on the U.S. dollar," Weinberg said.
                                
 Gold typically trades in a close negative relationship with
the dollar, as it is often bought as an alternative investment.
Like all dollar-priced assets, it also becomes cheaper for
holders of other currencies as the U.S. unit softens.
                                
 A dip in crude prices is also relieving some upward pressure
on gold, which is often bought as a hedge against oil-led
inflation. Oil softened as a drop in the Chinese stock market
fuelled fears over the country's economy. [O/R]
                                
 China's key stock index tumbled 6.74 percent on Monday to a
three-month closing low and recorded its second-biggest monthly
loss in 15 years after surging stock valuations overwhelmed
improvements in corporate earnings. [.SS]
                                
 
                                
 LONDON CLOSED
                                
 European shares also fell in early trade, tracking losses in
China. Traders expect a quiet trading session as London markets
are closed for a holiday. [.EU]
                                
 Gold demand from the main gold-backed exchange-traded fund,
New York's SPDR Gold Trust <GLD>, remained soft, with the fund
reporting its holdings were unchanged on Friday. [GOL/SPDR]
                                
 Silver fell 1 percent, pressured by gold's softer tone and
losses in base metals such as copper, which fell nearly 3
percent in Asian trade amid fears over the economy. Silver, like
copper, is a largely industrial metal. [MET/L]
                                
 Spot silver <XAG=> was at $14.61 an ounce against $14.74.
                                
 Platinum and palladium prices were also a touch softer,
pressured by a decline in prices of industrial commodities such
as oil. Platinum <XPT=> was at $1,237 an ounce against $1,244,
while palladium <XPD=> was at $286 against $287.
                                
 South Africa's mine workers' union said a strike at Impala
Platinum <IMPJ.J>, the world's second-largest producer of the
white metal, was likely to spread to the company's metal
refinery. [ID:nLV51764]
                                
 But analysts say persistent weakness in demand for the
autocatalyst metal and increasing above-ground stocks are
preventing prices from rising.
                                
 Last week Toyota, the world's biggest carmaker, said it was
considering cutting production capacity. [ID:nWNAB3472]
 (Editing by Sue Thomas)